THE FINANCE SOCIETY Market Update February 14 th

THE FINANCE SOCIETY Market Update February 14 th, 2019 Shlomo Husni, Ilan Kaissar Executive Committee Members

HEADLINES ▪ Trump Expected to Sign Border Wall Deal – President Donald Trump expected to sign a proposed agreement to allocate $1. 3 B to build a 55 -mile long wall along the U. S. -Mexico border – Intended to avert another government shutdown this Friday – Markets react well to the news, rising modestly on Tuesday and Wednesday ▪ Amazon Reconsidering Planned HQ 2 Campus in New York – Reconsidering after selecting Long Island City and Richmond to host “Headquarters 2” – Re-evaluation comes amidst political backlash to Amazon receiving $3 B in taxbreaks – HQ 2 expects to bring 25, 000 jobs and $2. 5 B in investments to Long Island City – “No specific plans to abandon New York” at the moment ▪ Apple Struggles Through a Woeful Q 4 – Revenue fell 4. 5% to $84. 31 B due to weaker i. Phone sales – 27% decrease in year-over-year sales in China, including 20% decrease in i. Phone sales – First decline in both revenue and profit in Q 4 in over a decade as Apple struggles against rivals like Huawei and Samsung 1

COMPANY OF THE WEEK: SEARS(U. S. : OTC: SHLDQ) ▪ Purchase of Sears Holdings Corp. Approved – Bankruptcy judge approves Edward Lamperts’ $5. 2 B bid to purchase Sears. – Deal expected to keep 400+ stores in operation and preserve 45, 000 jobs – Approval comes amidst opposition from some of the company’s other creditors ▪ Continued Involvement in Sears for Mr. Lampert – Helped merge Sears and rival Kmart in 2005 and gained control of Sears through his hedge fund ESL Investments – Through multiple managerial blunders when Lampert was C. E. O. and a changing landscape in the retail industry, Sears filed for bankruptcy protection in 2018 – Lampert saved Sears from complete liquidation by increasing his bid for the company in the last moments of auction ▪ Future Looks Bright For Recreated Sears – Restructured company will feature 223 Sears stores and 202 Kmart locations – Lampert plans to limit store size and apparel sales, focusing instead on tools and appliances – Company hopes to compete with larger retailers including Home Depot, Lowe’s, and Best. Buy 2

●DEAL OF THE WEEK: J&J ACQUIRES AURIS HEALTH EUR/USD WTI ▪ Johnson and Johnson to Purchase Medical Technology Firm Auris Health for $3. 4 B in Cash – Johnson and Johnson is one of the largest medical device companies in the world – Auris Health is a medical-technology firm that developed the Monarch Platform, a medical device that helps physicians during lung-surgeries ▪ The Push for Technology in Surgical Procedures – The acquisition is a signal that J&J seeks to expand its push into the use of robotic technology for medical procedures and surgeries – Medical-robotics is effective in mitigating human error improving patient outcomes – Surgeries with robotic technologies also command higher price-tags, meaning greater margins for procedures that J&J provides devices for ▪ J&J Should Proceed With Caution – Although robotic-technologies are useful, there is much concern about overuse and safety – Medical-device companies also face backlash from insurance companies and lawmakers over the increased cost of surgeries that use robotic technologies – J&J must weigh these risks as it increases its exposure to the surgical 3 technology market

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